Comments on: Stock Option Scandal: Make Shareholders Citizen Journalists

By: Distributed Journalism Conversation at Pressthink, Bloggercon | Center for Citizen Media: Blog

Sun, 18 Jun 2006 10:50:50 +0000

[...] The answer is absolutely. Read the posting and comment thread for some good discussion. Here’s what I posted: Generally speaking, what we’re discussing here are projects that can be broken down into little pieces where lots and lots of people can ask one question, or look at one document, or solve on piece of a big puzzle. Then the results are aggregated, parsed and reassembled into a coherent whole. It’ll almost always require some folks at the center. We used to call them editors. Reading all the laws is a great project, but I think it’s too big to chew on except as a long-term goal. I’d suggest paring it down to something smaller and much more essential: The next time Congress gets ready to pass an appropriations bill of any sort, we need an army of lawyers and others who understand legislative language to parse it *before* it’s passed. This may not be possible, of course, given the leadership’s increasing tendency to force members to vote on bills they haven’t had time to read, and after injecting last-second stuff that no one except a few staffers and lawmakers knows about. The way to experiment with this is to take it down a level, to the state legislature. Pick a state that’s relatively uncorrupt and do roughly the same thing. The project will be more manageable, though you’ll probably find less, if much at all, of the material that turns into headlines. Last fall, by the way, I proposed that major media organizations bring in the citizens for a project on the Katrina reconstruction. No takers, unfortunately, but I still think it was a good idea. (One organization is still thinking about doing this but hasn’t acted.) I also, more recently, suggested that the Wall Street Journal expand its brilliant coverage of the stock-options scandal and do a thorough, citizen-driven database of how widely (or not) this sleaze has spread. Stay tuned on this one. As to the question of whether it’s a good idea to tell your competition what you’re working on, this depends on what you want to accomplish and whether it matters if the thing is done in full view in the first place. Is the goal to do good journalism, to serve the public? Or is it a professional scoop? Wouldn’t someone “stealing” the idea be seen as a thief, if he/she used the material gathered under your wing without credit? And aren’t there many kinds of investigations where it’s just fine to let the targets know they’re being investigated? I don’t expect Seymour Hersh to tell us ahead of time precisely what he’s working on. But many, many kinds of investigations are better done in the sunlight. Some — like the ones we’re talking about here, where there’s no way to do them without massive help from the community — should be done that way. [...]

By: Andrew Lih » Blog Archive » Mark Cuban - Anti-stock-fraud web site

Andrew Lih » Blog Archive » Mark Cuban - Anti-stock-fraud web site — Wed, 14 Jun 2006 01:28:13 +0000

[...] News is out that Mark Cuban is funding sharesleuth.com, with the help of veteran business reporter “Christopher Carey, a 17-year St. Louis Post-Dispatch staffer,” and citizen journalists. Dan Gillmor suggested such a project back in May. …Cuban is financing a new Web site that will investigate stock fraud and corporate wrongdoing. The billionaire also said he’ll buy and sell stocks based on information before the site publishes it. [...]

By: Anon

Anon — Tue, 30 May 2006 20:18:52 +0000

I gotta agree with Seth’s comments – requires READING on the part of the volunteers. Heck, I gotta wonder how much you actually read this Dan … and weren’t you a tech reporter at the Mercury News or something like that … so your inaccuracy and omissions jumped out at me as shown below.

WSJ reporting is (as usual) absolutely top-notch … and they should win a Pulizer Prize for this great story. And yea, New York Times got scooped badly – heck, the data is all public record, amazing it didn’t pop up until now – says something about the quality of journalism these days I think.

WSJ *did* explain how/who analyzed it. You wrote above:

“All I can say from reading the stories is that the Journal is apparently using methodology mostly of its own creation, vouched for by some (unnamed?) academic experts, to figure out whether a given company’s managers have been pulling a fast one.”

Here’s the first two paragraphs that explains this for you Dan – was an obvious link from the article. And subsequent reporting has detailed this along with other academic experts they have consulted. I included the second paragraph below because you failed to mention how this is MUCH less of an issue now. But we’ll see the pre-SO unetherical dealings reverberate for a few years as earnings from back then are re-stated and some people go to jail.

How the Journal Analyzed
Stock-Option Grants
By CHARLES FORELLE
March 18, 2006; Page A5

The Wall Street Journal asked Erik Lie, an associate professor of finance at the University of Iowa who has studied backdating, to generate a list of companies that made stock-option grants that were followed by large gains in the stock price.

The Journal examined a number of the companies, looking at all of their option grants to their top executive from roughly 1995 through mid-2002. Securities-law changes in 2002 curtailed the potential for backdating a grant.

By: Dan Gillmor

Dan Gillmor — Tue, 30 May 2006 17:43:30 +0000

Your two positive suggestions were effectively to re-create the top-down model, which I’m trying to avoid in this case. But they might well work, just as this might work.

Let’s agree to disagree, but feel free to have the last word.

By: Seth Finkelstein

Seth Finkelstein — Tue, 30 May 2006 17:25:20 +0000

Let’s put it this way – I have a very dim view of “Unpaid Freelancing”. For every bubble-stock-style success story, there’s a huge number of dot-crash-type unpublicized failures. But the claim that I “won’t even acknowledge the possibility that it might work in some cases” is false. HOWEVER, the *possibility* is a very weak argument for the *actuality*.

I’m in fact pretty interested, sociologically, in what makes this stuff tick – but I do have a view of it that’s much less promotional, and, to be fair, much more cynical.

On the specifics, once more, my basic analysis is that this project is not a good candidate for outsourcing to voluteers, because of the high upfront learning curve, the interpretive skill required, combined with the tedium of the work. However, the relative professional value of the data makes it well-suited for journalist interns and/or legal-firm researchers. Hence my recommendation to pursue those avenues to realize it, and both are venues where you have some connections (you might give me some credit for having two positive suggestions on alternate ways it can be achieved, even if I am sardonic about the joys of being a data-miner).

Of course “we won’t know for sure unless someone tries”. But that’s different from an estimate of whether it’s *likely to succeed*.

By: » Gillmor: Make stock option scandal a citizen journalism project

» Gillmor: Make stock option scandal a citizen journalism project — Tue, 30 May 2006 17:09:30 +0000

[...] Read more here. [...]

By: Dan Gillmor

Dan Gillmor — Tue, 30 May 2006 16:19:59 +0000

Seth, I do challenge the correctness of what you say, not just the tone in which you say it.

You have such antipathy toward the very notion of volunteer, distributed journalism that you won’t even acknowledge the possibility that it might work in some cases. I think this is one, but we won’t know for sure unless someone tries.

By: sonitus.org » Blog Archive » Undersøkende leserjournalister kan styrke journalistikken

Tue, 30 May 2006 11:39:23 +0000

[...] Den utrettelige forkjemperen for grasrotjournalistikkens fremvekst, Dan Gillmor tar i sin blogg til orde for at selveste Wall Street Journal danner et tettere samspill med sine aksjeeiende lesere. [...]

By: Seth Finkelstein

Seth Finkelstein — Mon, 29 May 2006 03:04:05 +0000

First they have to *read* a), b), c). Then they have to dig through the reports and try to apply it. That’s a significant amount of time. Especially since people who own stocks, and also *care* about stocks, tend to be among the busier people (though I’ll grant retirees might have the leisure).

How would the correctness (or lack thereof) of my argument ever be affected by whether or not I spoke of “marks”, or “graciously volunteering public-minded democratized wise amateur citizen-analysts”? An estimate of time required and willingess is either accurate or not – the “color” I use is irrelevant (ok, it matters whether or not I’m considered an insider or outsider in terms of group signaling, but I crossed that bridge a long time ago).

By: Dan Gillmor

Dan Gillmor — Mon, 29 May 2006 02:23:52 +0000

I’m not suggesting that people go out and hunt for needles in haystacks by themselves. I am saying the Journal (or someone else) should help them by explaining a) specifically what to look for; b) where they’re likely to find the numbers; and c) why this is a useful exercise. How does that require a significant amount of timem from the investors? I don’t see it, especially when they’re likely to be learning something useful.

If they’re not interested, fine. But all it takes is a couple of shareholders for each company. (And it’s really not helping your argument to call them rubes.)